“Urban efficiency and service productivity — driven by IT — will be defining themes in coming years in Asia.”

Dr Martin Schulz, authority on the fast-evolving economies of Asia

Image: Robin Mellor

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The challenges of managing smart megacities

Kenny MacIver – August 2015

From the Internet of Things to big data, digital technologies are increasingly playing a pivotal role in the effective management of the world’s economic powerhouses, argues Fujitsu’s Dr Martin Schulz.

Cities are the backbone of global economies. According to McKinsey, the largest 600 metropolitan areas account for around 60% all global GDP. However, over the next 10 years the composition of that 600 will change dramatically as an estimated 136 new cities in Asian economies take their place in the top 600 (100 from China alone).

That is a trend Dr Martin Schulz, senior economist at the Fujitsu Research Institute, the Tokyo-based think-tank, is witnessing first-hand. “In terms of city development, the numbers coming from Asia are purely mind-boggling. Cities are powering the demand trends of the region,” he says — and no more so than Asia’s megacities [those with populations of more than 10 million] such as Shanghai, Seoul, Bangkok, Beijing, Guangzhou and Jakarta.

But with explosive growth in urbanization comes a whole host of challenges, including effective transportation management, the establishment of logistics infrastructure and communication networks, and the provision of healthcare and education services. And, as Dr Schulz points out, digital technologies will play an increasingly important role in ensuring that commercial and government organizations are able to address those, and thus harnessing further successful growth for their metropolises.

For Dr Schulz, the Tokyo area, with its population of 37.9 million, has been a forerunner of such trends. “While it is the world’s foremost megacity, Tokyo has world-beating efficiency in almost every area, from basic infrastructure to logistics, retail, health and food services. That has made Japan a world leader in smart urban services — perhaps not too surprising given that the country’s urbanization rate will be an extreme 95% by 2020,” he argues. “So the rest of Asia’s megacities are becoming prime markets for its advanced city systems.”

“Urban efficiency and service productivity will be defining themes in coming years, from China to South Asia.”

“Many Japanese companies are already thriving through the provision of smart urban services,” says Dr Schulz. “The efficiency and delivery capabilities of convenience stores have been revolutionized; thanks to pioneers such as Yamato, big city logistics are now streamlined, from airport arrival to home delivery e-bikes; Rakuten is bringing more traditional retailers into virtual malls by hosting their services; and security is becoming a virtual service with the help of companies such as SECOM. Meanwhile, major groups such as Hitachi and Panasonic have been transformed from manufacturers of industrial machinery and consumer electronics to providers of entire social infrastructure systems, electric mobility solutions and eco-friendly smart homes.”

Another cutting-edge example of such systems is Fujitsu’s urban information service, Spatiowl. An integrated transportation management platform that has been deployed in Tokyo, it uses widely deployed sensors, Hadoop-powered big data analytics and Fujitsu cloud technology to create detailed, real-time models of traffic and people flow.

And that megacity expertise is already being shared elsewhere in Asia. Indonesian toll road management company PT Marga Utama Nusantara is implementing Spatiowl to provide drivers with real-time information on traffic congestion and so encourage the use its toll roads.

As that highlights, while Asia’s main engine of growth is breakneck urbanization, to be sustainable and positive it needs to be accompanied by infrastructure modernization. As Dr Schulz argues: “Urban efficiency and service productivity, driven by IT, will be defining themes in coming years, from China to South Asia.”

• Dr Martin Schulz will be speaking on ‘Improving Society through Technology — the Japanese Way’ at Fujitsu Forum 2015 in Munich (18-19 Nov).

A senior economist at the Fujitsu Research Institute — the think-tank of ICT group Fujitsu — Dr Martin Schulz looks at Asia’s economic trends from a technology perspective. Based in Tokyo for the past 20 years, Dr Schulz explores the nexus of macroeconomics and corporate strategy.

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